A quarter that many in the market had braced for disappointment delivered the opposite. SAP’s first-quarter results for 2026 landed well above consensus, snapping a months-long slide that had erased more than a quarter of the stock’s value since January. Shares surged 6.2% on Friday to close at €148.74 on XETRA, clawing back some ground after touching a year-to-date low on April 10.
The trigger was a clean beat on profitability. SAP reported non-IFRS operating margin of 28.7%, a gain of 2.8 percentage points year-on-year. Adjusted operating profit rose 24% on a currency-adjusted basis to €2.87 billion, comfortably ahead of the consensus estimate of roughly €2.7 billion. Total revenue climbed 6% to €9.56 billion, while IFRS earnings per share came in at €1.66, slightly topping analyst forecasts.
Chief Financial Officer Dominik Asam attributed the outperformance to disciplined cost control. Deutsche Bank Research analyst Johannes Schaller described the quarter as a “relief quarter,” noting that the start of the year turned out significantly better than feared. The bank maintains a “Buy” rating with a price target of €200.
Cloud Growth Anchors the Upside
The cloud business continued to serve as the engine room. Currency-adjusted cloud revenue jumped 27%, reinforcing the narrative that SAP’s transition to a subscription-based model is gaining traction. The company left its full-year guidance unchanged, still targeting cloud revenue of €25.8 billion to €26.2 billion, representing currency-adjusted growth of 23% to 25%.
Yet the market’s reaction, while sharp, has not erased the broader damage. The stock remains roughly 26% below its level at the start of 2026, and over a 12-month horizon the decline stands at about 38%. The rally on Friday, though welcome, lifted the shares only a few euros above the year’s low.
Should investors sell immediately? Or is it worth buying SAP?
Analyst Divergence Persists
Not everyone is convinced the worst is behind. Barclays highlighted the momentum in SAP’s business AI offerings as a positive catalyst. But DZ Bank struck a more cautious tone, cutting its fair value estimate from €150 to €130 and maintaining a “Sell” rating. The bank’s rationale centers on an expected deceleration in growth during the second half of the year, a risk that the first-quarter beat does not fully dispel.
AI Monetization and the Sapphire Catalyst
Management is now turning its focus to the next phase of the strategy: converting AI investments into recurring revenue. Starting in July 2026, SAP will introduce a consumption-based billing model for its AI services. Further details on the quality of its AI agents are expected at the SAP Sapphire customer conference in May, where the company will also deploy specialized implementation teams to work directly with clients.
CEO Christian Klein is pushing ahead with the transformation from a traditional licensing business to a cloud-native AI platform. The coming weeks offer several concrete milestones. The virtual annual general meeting is scheduled for May 5, followed by the ex-dividend date on May 6 for the proposed payout of €2.50 per share. The Financial Analyst Conference, held alongside Sapphire on May 13, will be the key venue for management to convince institutional investors that the AI strategy merits a re-rating.
Dividend and Buyback in Focus
Shareholders are also watching the dividend proposal. The €2.50 per share payout will be put to a vote at the AGM. If approved, the cash will be distributed three days later. Separately, SAP completed a multi-billion-euro tranche of its ongoing share buyback program in April, adding another layer of capital return.
For now, the market has taken a deep breath. But with a steep year-to-date deficit still to close and a skeptical analyst camp waiting for the second-half slowdown, the relief rally may prove short-lived unless the Sapphire event delivers a compelling AI monetization story.
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